What’s in Store for the Future of Loyalty Marketing?

Apr. 7, 2014

Loyalty programs: nowadays, it seems like they’re everywhere. And they’ve become so prevalent that today’s consumers expect them. This presents loyalty marketers with two fundamental challenges: differentiating their brands in the crowded incentive space, and keeping up with “always-addressable” customers who move more fluidly than ever before across channels, locations and devices.

In response to this competitive and dynamic environment, loyalty programs are evolving in four key ways:

1. Loyalty programs get personal.

Loyalty marketers are leveraging customer knowledge to personalize user experiences and deliver the right offers at the right times. They achieve the most success when targeting highly valued customers based on their previous buying behavior, as opposed to rewarding everyone who’s joined a program.

Beyond targeting specific groups of loyalty program customers, marketers are also focused on increasing the relevance of interactions, often through better timing. Rather than sending promotions and content as a follow-up to a customer interaction, retailers are now delivering rewards in real time, in-store, while a transaction is occurring. Companies are also exploring cross-brand loyalty by performing analysis to evaluate the incremental value of multi-brand interactions and designing relevant promotions to encourage cross-brand shopping and loyalty.

2. Loyalty programs become as multichannel as the customer.

It’s no secret that the traditional loyalty program membership card is becoming a less important artifact than it once was. Many retailers have ditched their card-centric loyalty programs altogether and have moved onto offering everyday low prices.

Though physical cards won’t disappear completely – especially considering the needs of more traditional consumers – retailers like Starbucks are doing an excellent job of exploring new multichannel variations of the membership card theme, including embedding loyalty program capabilities directly within mobile apps and offering digital wallet functionality for easy, on-the-go payments.

3. Loyalty marketers remove barriers-to-entry.

Marketers are in search of ways to remove friction from loyalty program registration, and to make it as easy as possible for customers to sign up. Rather than forcing them to complete lengthy forms at checkout, online or via mail, it’s becoming the norm to simply enter their phone numbers at the point of sale to create a new loyalty program account. And conversely, identifiers such as phone numbers and email addresses become the backup to the loyalty card and a program-level unique identifier.

Walgreens, for instance, is embracing this change by simplifying signups. Customers provide their phone numbers at checkout registers, and then it’s matched back to a database to retrieve mailing addresses, confirm the information is correct, and complete the automatic enrollment. While physical cards are still distributed, the phone numbers are the primary form of identification.

4. Tools are emerging to bring method to the loyalty madness.

With so many loyalty programs in existence, it was only a matter of time before the advent of aggregators, which make people’s lives easier by streamlining loyalty information across different programs. Free third-party mobile apps like Belly, CardStar and Key Ring eliminate the need for people to carry around their loyalty cards. Users gain the added benefits of having consolidated views of their tracked rewards points, the ability to create shopping lists, access to merchants’ coupons and deals for mobile use, and more.

While retailer-level apps and cards still remain functional, loyalty programs will need to expand to incorporate third-party aggregators as a loyalty program distribution channel and partner with relevant suppliers to reach target audiences.

As loyalty marketing programs become increasingly woven into people’s lives and buying behavior, more and more retailers are turning to Signal to collect relevant customer data across touchpoints; integrate it and distribute it the right way (via a tag central information hub); and activate it so that they can have more personalized, device-specific interactions with their customers in a timely and trackable fashion.

Loyalty programs run on data – it’s the lifeblood that enables brands to better understand what their customers are looking for. By using an experiential, data-centric strategy, brands can deliver more tailored marketing to capitalize on buying intent while it’s fresh and determine what people are likely to purchase next.